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Worldwide travel is booming. The latest figures reveal the entire industry generated a staggering $8.27trillion in 2017. In January of this year alone, UK residents made 4.6 million trips abroad with spending reaching £2.7 billion.
When it comes to the areas generating the most revenue, foreign currency for travel is a key contributor. According to the Office for National Statistics (ONS) around £66.3bnis spent on currency each year, with over a third of travelers taking over £500, and a quarter taking up to £1,000 spending money on their trips.
Old school reliance on cash
Often at the bottom of to-do lists when planning breaks, instead focusing on transport, accommodation and insurance, travelers are leaving themselves with limited options when sourcing their money. Driven by the fear of hefty transaction fees, 94 per cent of people still rely on cash for their travel.
Interestingly, according to latest figures from UK Finance, cash payments have declined by 15 percent over the last year, gradually gearing us towards a cashless society. This behavior is increasingly translating into travel too with 14 per cent of peopleusing prepaid cards last year, a 6 per cent increase from 2016.
Cash carrying worries
From a safety perspective, having cash on your person leaves you vulnerable in the event of theft or loss as travel insurance will only cover relatively small amounts of cash. This can range from £200 to £500,so with travelers usually taking more than this abroad, their money is at risk.
There’s also the added worry of having to find out how much cash can be physically taken into each country as this varies worldwide. Travelers are advised to research this before embarking on trips to find out what might need to be declared at customs. When traveling between the UK and a non-EU country, cash over €10,000 must be declared. Failing declaration, means travelers could face a fine which would dampen any trip.
Missing out on the best exchange rates
As well as being hit by exchange rates when using debit/credit cards, a recent study by Travel Money Club, found that exchange rates of providers can differ by as much as 6.25per cent. Therefore, travelers sourcing cash worth £2,500 are paying as much as £200 (8%) extra in charges such as exchange rate markups, hidden fees and commission, amounting to £1.15bn a year.
What’s more, due to the lack of planning when sourcing cash, travelers are being stung by not planning in advance. For example, FairFX reports, that the three months prior to the most popular holiday season (mid-July) fluctuates by 7 per cent. That is an extra £68 for families wanting to take out £1,000. While the benefits are high when forward planning, it’s just not in line with average traveler behavior of leaving cash sourcing to the last minute.
So, what can travelers use instead of cash?
Tech travel money solutions
The banking and payment technology industries have gathered incredible momentum in the travel space. And, as it continues to evolve, consumer behavior drives the need for alternative and safer travel payment procedures.
At PrePay Solutions, we work with a number of prepaid travel money card providers. Acting like a typical credit or debit card, a prepaid travel card can be loaded with foreign currency before any trip and used solely to make purchases or to take out cash abroad. They incorporate latest technologies designed to help travelers avoid being stung by issues that come with using cash abroad. While all of the available cards are different, they each carry similar overarching benefits.
The main benefits of prepaid cards
Unlike debit and credit cards, they are not linked to bank accounts or any other personal details, limiting the chance of fraud. Plus, these types of cards are much safer for customers than carrying cash, as traveler’s funds are not lost if their card is stolen.
Additionally, there are no foreign exchange fees when used to purchase in different countries. Furthermore, once you have loaded your card with foreign currency the rates stay fixed which means you won’t lose any money should the rates fall. With access to an extensive range of currencies, the cards can be used to source monies including Euros, American, Canadian or Australian dollars and Thai Baht.
With great exchange rates, the cards have simple and transparent fee structures, with no transaction fees abroad unless the customer uses an ATM. This allays concerns over unknown fees that mainstream providers often charge for using debit or credit cards abroad.
Ensuring a trip with no cash issues
Money, in whatever form, is an important part of any travel arrangements. Therefore, an efficient payment procedure is a crucial thing to get right for all aspects of a trip to run smoothly.
While travel cards have been around for a while now, the growing trust, improved functionality and skyrocketing of day-to-day card usage indicates that we are finally at a tipping point of moving away from travel cash for good. That’s why we work with leading card experts, to ensure the clever technology behind prepaid cards are the securest and most convenient way to take money abroad.